Inarcassa, the €18bn pension fund for Italian engineers and architects, is stepping up the use of alternative routes to speed up capital deployment in private markets and reach its strategic allocation.
Open-ended funds to ensure continuity of investments, secondary market deals to shorten deployment timelines, co-investments, late primaries to invest at a later stage with greater visibility on underlying assets, and larger ticket sizes are among the measures adopted, said Inarcassa president Massimo Garbari.
Alternative approaches accounted for 66% of the €900m committed to private markets last year, leading to the recall of 43% of the capital, Garbari said at a private markets forum organised by We Wealth last week.
“The biggest problem is the time to recall invested capital, less than one year in 2020, and almost two years in 2025,” he added.
Inarcassa faces structural constraints in deploying capital to alternatives. Allocation rounds are “intense and recurring”, regulatory limits cap concentration risk and restrict large commitments, and the overall targets are “ambitious”, according to a presentation delivered by Garbari.
The fund is targeting a 34% allocation to private markets, compared with 28.2% currently invested. To close the gap, Inarcassa plans to invest both domestically and internationally, diversify across vehicles and asset managers and mitigate risk through broader exposure.
The need to realign the portfolio with the strategic allocation puts the fund “under pressure to find the right investments”, Garbari said.
Industry context
Industry-wide pension funds, including ‘fondi negoziali’ and pre-existing schemes, allocate around 10% of their €150bn in assets to Italian bonds and 8-10% to private markets, Giovanni Maggi, president of Assofondipensione said at the same event.
Second-pillar schemes have established public-private partnerships to channel roughly €1bn into Italian private markets alongside Cassa Depositi e Prestiti, and into European strategies with the European Investment Fund.
“With the European Investment Fund, we have started with a fund of funds private equity strategy, with the aim to invest in other [alternative] asset classes,” Maggi added.
Cautious approach among large schemes
Large Italian pension funds remain measured in their approach to private assets.
Some, including the €15bn metalworkers’ scheme Cometa and the €9.2bn chemical sector fund Fonchim, have opted not to commit significant capital to alternatives.
By contrast, the commerce sector fund Fondo Fon.Te plans to allocate a further €400m to reach €1bn invested across private equity, private debt, venture capital, infrastructure and real estate, Maggi said.
Paolo Tomassoli, general director of Fonchim, said the scheme is proceeding cautiously so as to better understand the characteristics of private assets compared with public markets.
Alternative investments are complex in terms of risk return, liquidity, costs and operational complexity, commitments, recalls, fair value valuations, that required further analysis before being included in our investments, Tomassoli added.
Fonchim has so far made two alternative investments – one directly as part of a consortium and the other via the selection of an alternative investment fund manager – following a process similar to that used for public market mandates, he said.
Fonchim invests 9% of its assets in Italy, mainly in government bonds, with additional exposure to corporate bonds and other listed securities.
“The current exposure to Italy is right, if we stick to purely financial logic,” Tomassoli noted.
